Navalny was given a suspended prison sentence of three-and-a-half years for defrauding two firms.
But his brother Oleg is facing a three-and a-half year custodial sentence.
Navalny has consistently said the charges were politically motivated. He accused President Vladimir Putin's government of targeting the relatives of his opponents.
The brothers were convicted of stealing 30m roubles (£334,600; $518,100) from the firms, one of which is an affiliate of French cosmetics giant Yves Rocher.
'Political pressure'
Prosecutors had demanded 10 years in prison for Alexei Navalny and eight years for his brother Oleg. Although both were found guilty of embezzlement, only his younger brother will be jailed.
Navalny denounced the verdict as political "pressure". He tweeted in Russian: "Of all of the possible types of sentence, this is the meanest."
The BBC's Steve Rosenberg, who was in court, said that Navalny was clearly shocked by the outcome of the trial for his brother.
"Why are you putting him in prison?" he asked the judge. "To punish me even harder?"
Alexei Navalny has been one of Mr Putin's fiercest critics for several years, leading mass protests against his government in 2011 and 2012.Tuesday's verdict is the latest in a series of criminal cases against Navalny, which he says are fabricated to neutralise his political influence.
In 2013 he came second in Moscow's mayoral election, supported by 27% of voters.
Mr Navalny is already under house arrest, serving a five-year suspended sentence for the alleged theft of 16m roubles (£175,400; $276,300) from a timber firm in 2009.
The latest verdict was due to have been announced next month, but the court session was abruptly moved forward to Tuesday after thousands of his supporters announced plans for a big protest rally on 15 January.
After sentencing, Navalny called on his supporters to protest. "I call on everyone to take to the streets today," he said.
Thousands have already said on Facebook that they plan to attend a rally in Moscow's Manezh Square, near the Kremlin, at 19:00 (16:00 GMT) on Tuesday.
